John Feldt ERPA CPC QPA

My understanding from the EZ instruction alone is that the determination of the type of 5500 to file is based on the eligible participants in the plan you are filing. So if that plan is written to cover only the 100% owner (and spouse), or only partners (and spouses) in a partnership, then you aggregate the balance with any other owner-only plan to determine the 5500-EZ threshold and you still file 5500-EZ regardless of being permissively aggregated for coverage with any plans covered by ERISA.

Larry is not wrong.

Have them re-read Treasury Regulation section 1.401(a)(4)-4(d)(4)? (4)Permissive aggregation of certain benefits, rights, or features- (i)General rule. An optional form of benefit, ancillary benefit, or other right or feature may be aggregated with another optional form of benefit, ancillary benefit, or other right or feature, respectively, and the two may be treated as a single optional form of benefit, ancillary benefit, or other right or feature, if both of the following requirementsare satisfied: (A) One of the two optional forms of benefit, ancillary benefit, or other rights or features must in all cases be of inherently equal or greater value than the other. For this purpose, one benefit, right, or feature is of inherently equal or greater value than another benefit, right, or feature only if, at any time and under any conditions, it is impossible for any employee to receive a smaller amount or a less valuable right under the first benefit, right, or feature than under the second benefit, right, or feature. (B) The optional form of benefit, ancillary benefit, or other right or feature of inherently equal or greater value must separately satisfy paragraphs (b) and (c) of this section (without regard to this paragraph (d)(4)). (ii)Aggregation may be applied more than once. The aggregationrule in this paragraph (d)(4) may be applied more than once.

I personally like the Relius (PPD version) for DC plans, especially because of some of the flexibility that is available in the BPD (particularly regarding irregular compensation and for discretionary matching - they've gotten a lot of plans out of some trouble there with that). ftwilliam has additional flexibility in some areas, but less flexibility in other areas. Hard to compare. in my experience, FIS has provided good solid document support. ftwilliam has greatly improved in that area. I have used the FIS (Corbel) cash balance document in the past. For their PPA restatement, I did not see a place to specifically identify the stability period and the lookback month(s) for any cash balance plan that defines their interest crediting rate as tied to a variable rate, such as the 30-year treasury rate. I see it for the actuarial equivalence/417 definition, but not for defining a non-fixed rate crediting rate. For example, it asks you to select the crediting rate, such as the lesser of the 30-year treasury or 5%, but I do not see where it asks you to define how the 30-year treasury is determined or for how long that rate stays in place. That's a really big deal for a cash balance plan. That said, I am sure this has been pointed out to them and they probably already have a custom language section in their system already to handle with a manual work-around. I do like that they give you a nice checkbox to apply the 1000 hours requirement for accruals only to HCEs (to help with 401a26 for young terminees that leave with few hours). I use the ftwilliam document now for cash balance due to a change in jobs a few years back. There may be some things in their document that I'd like differently, but it does allow you to define the stability period and lookback period for a plan that does not use a fixed rate as its crediting rate. ftwilliam also has a wonderful time-saving checkbox to say: shall we provide a separate SPD for each cash balance rate group? or just one SPD with everyone's formulas in it?

FIS (SunGard) (Relius) (Corbel) (PPD) (etc.)

Great to hear from the great Derrin Watson! As you start ding the testing, if you see some of them failing coverage, keep in mind that you might be able to aggregate some plans together. For example, when we did this for four large plans and one small plan for five employers all owned 99% by a foreign company, two of the plans were current-year tested and could be aggregated (that helped us pass), two were prior-year tested and could be aggregated but did not need to be aggregated to pass, and the last small plan was safe harbor and had to pass by itself. That last plan just squeaked by using the average benefits test for coverage and by applying the OEE rule and some other uncommon testing options that are available. Of course, it's more complex than just that since you have up to three coverage tests for each plan as Derrin mentioned, but just keep aggregation in mind when you start getting these going (after they've engaged you, of course).

Ned Ryerson (Ground Hog Day) must be the agent.

My understanding is that amendment, as you described, would end the transition period. If your client is a serial acquirer, this is certainly one on the problems they face if they are relying on using the transition period.

Sure, you can amend to change the trustees and to change the plan name, things of that nature.

My understanding is that only if it’s under $200 that you can just give them the check and the 402(f) notice with no advance period or election.

Operational failure. After reviewing the document and the amounts involved, if it’s really 15 years, negotiating a solution under VCP would probably be the recommendation.

That’s right, cash for minimum funding. Above that you may have other options, but you really never should do it in a small plan. https://www.chicagotribune.com/news/ct-xpm-1994-05-11-9405120061-story,amp.html

If they ask the Treasury Secretary, they may be able to get it allowed, however that is very expensive to try and very unlikely to get approved. Was GM able to do something like that?

Is the plan document a “standardized” prototype plan document?

You could have imputed disparity using 100% of the taxable wage base, but my understanding is the 100% TWB is the only level available for imputing.

See IRS Notice 2016-16

But you may be able to use the OEE rule to avoid gateway for those under 21/1.

No. And, You should be able to use a formula that is not based on current compensation, if your document will allow.

And if you filed without the report and still don't have it within the 45 days after the letter, the plan sponsor should be prepared to pay the $50,000 penalty or pay the cost to get an attorney involved, either of these are more costly than using the DFVCP option. If you don't file at all, the DOL generally allows the IRS to contact you first so that you still have time to use DFVCP. I agree with MoJo's comment above that filing anyway, without the audit completed, can be a dangerous practice.

Yes, that can be done if the 70% ratio percent test is used to pass coverage.

We posed a number of questions to our major investment platforms and have a handful of responses back. You are correct that the IP's capability (or lack thereof) will greatly affect a TPA. If, as the document sponsor/practitioner, you intend to adopt an interim amendment in late 2019 or whenever it's finally required, with a retroactive effect to 1-1-2019, you will likely have a bunch of employers that will need to adopt their own provisions to override your interim amendment defaults. Are you setting up tracking mechanisms now to internally monitor exactly which employers will not use your defaults and exactly which provisions they will need to manually adopt? Do you even know what you intend to do administratively for your own defaults? if not, you just might want to get started on that.

Corporation

Husband/wife own 96% of the company and are eligible for the plan. No other employees. Their adult kids own the other 4%, but the kids are not employees, not eligible for the plan. Eligible for EZ, or must they file SF?

IRA? It’s my understanding that housing allowance treatment does not apply to an individual IRA, so it seems more likely the question is regarding a 403(b) or qualified plan.

DC plan has a last day requirement for nonelective allocations. DC plan gives a SH match, not a 3% SH nonelective. The DB and DC Plans are top-heavy. The plans are written to say that employees in both plans receive 5% top-heavy minimum in the DC plan. Plans are combined for coverage and 401(a)(4) testing. Assume coverage and 401a26 are not problems, even is a handful of employees terminate. No one has under one year, so OEE is not in play here. 1. Suppose one non-key HCE is excluded by name or job class from the cash balance plan, eligible for the 401(k)/PS plan, but not deferring. That HCE terminates after working 1,000 hours. As an HCE, the gateway minimum does not apply. But, as a non-key employee, because they are not employed on the last day, no top-heavy allocation is required even though the plans are aggregated? 2. Now suppose a NHCE (also non-key) is excluded by name or job class from the cash balance plan, eligible for the 401(k)/PS plan, but not deferring. This NHCE also terminates after working 1,000 hours. As a non-key employee, because they are not employed on the last day, no top-heavy allocation is required? If that is true, then as an NHCE, they must receive the minimum gateway, but since the are not receiving any nonelective allocation, the gateway minimum is not triggered, so no allocation? Please confirm or please set me straight on this. Thanks!